‘Hurricane Effect’ Aside, Mortgage Performance Improved in 2017

Despite a triple whammy of summer hurricanes, along with California wildfires that drove up mortgage delinquencies toward year-end, the overall rate of mortgage delinquencies and foreclosures fell in 2017, said Black Knight, Jacksonville, Fla.

The company’s monthly Mortgage Monitor report said though mortgage delinquencies ended 2017 at a 23-month high (up 164,000 from 2016 year-end), in non-hurricane-impacted areas, which represent 90 percent of the total market, delinquency rates declined. Black Knight said the national delinquency rate in non-hurricane-affected areas was 11 percent below long-term norms.

The report also said mortgages either past due or in foreclosure fell by more than 140,000 in non-hurricane-affected areas, pushing the non-current rate in these areas down to 10 percent below long-term norms.

Black Knight reported 649,000 foreclosure starts initiated in 2017, the fewest of any year since 2000. The year also saw the fewest first-time foreclosure starts on record, which were both 15 percent below 2016 levels and roughly half their pre-crisis annual average. Additionally, Black Knight said the 232,000 foreclosure sales (completions) in 2017 marked the lowest single-year total since the turn of the century.

“Hurricanes Harvey and Irma significantly impacted 2017 mortgage performance metrics,” said Black Knight Data & Analytics Executive Vice President Ben Graboske. “Due to the various foreclosure moratoria put into place after the storms, there was no hurricane impact to speak of in that regard. In fact, the improvement in foreclosure inventory–which continued unabated in 2017–may have actually received a short-term boost from the moratoria.”

Black Knight also reported evidence of the “hurricane effect” in the home equity market. Similar to the first lien market, nearly 10 percent of active home equity loans and lines of credit–more than one 1 million–are in areas impacted by the year’s major hurricanes, primarily in Florida.

Black Knight reported “noticeable jumps” in past-due loans and lines, although the overall impact was muted compared to the first lien market. In Irma-impacted areas, the share of past-due second lien lines of credit increased from July to November by 117 basis points (from 3.2 to 4.4 percent) and second lien loans by 349 basis points (7.2 to 10.7 percent). Increases were also seen in Harvey-affected areas of Texas, with the non-current rate on lines increasing by 79 basis points to 1.9 percent, and by 378 basis points on loans to 11.8 percent. An estimated 17,200 second liens became delinquent as a result of the storm, with 5,000 resulting serious delinquencies. In a market where delinquency rates are relatively low, the rise has been noticeable.

Other report data:

–Total U.S. loan delinquency rate: 4.71%, a monthly change of 3.47%;

–Total U.S. foreclosure pre-sale inventory rate: 0.65%, a monthly change of 2.2%;

–States with highest percentage of non-current loans: Mississippi, Florida, Louisiana, Alabama, West Virginia.

–States with lowest percentage of non-current loans: Idaho, Washington, Oregon, North Dakota, Colorado.

–States with highest percentage of seriously delinquent loans: Florida, Mississippi, Louisiana, Texas, Alabama.